Interesting, but with more than 80% of new mortgages as FHA, we have roughly 80% of the market existing due to government financing. If we add the $8k tax credit,  and low rates, we have a very, very weak environment. As reported in Yahoo Finance today:

Housing construction up, but picture is mixed

August housing construction rises to highest level in 9 months, boosted by apartment building

WASHINGTON (AP) — Housing construction rose in August, but the results were mixed, with the large single-family sector falling for the first time in six months.

The August performance added to signs that the housing industry has begun to recover from its worst downturn in decades. Still, economists cautioned that the rebound likely will be slow and tentative, given the glut of unsold homes and record levels of home foreclosures.

Construction of new homes and apartments rose 1.5 percent to an annual rate of 598,000 units last month, the Commerce Department said Thursday, but the strengh all came from the multifamily sector. The increase was slightly lower than the 600,000-unit pace that economists had forecast — and it’s more than 70 percent below the peak hit in 2006.

Applications for building permits, a gauge of future activity, rose a 2.7 percent in August to an annual rate of 579,000 units, slightly below the 580,000 level that had been forecast. Permits for single-family homes dipped 0.2 percent but rose for multifamily units by 15.8 percent.

The 1.5 percent rise in housing starts followed a small 0.2 percent dip in July. The August strength reflected a 25.3 percent surge in construction of multifamily units, a volatile sector that had fallen 15.2 percent in July.

The larger single-family sector dipped 3 percent last month to an annual rate of 479,000 units, the first setback following five straight monthly gains.

Paul Dales, U.S. economist at Capital Economics, noted that housing starts remain 74 percent below their 2006 peak and predicted the housing recovery would be a very “long-winded process.”

Other economists said the overall gain was still an encouraging sign that the worst is over for housing.

Full article at-

http://finance.yahoo.com/news/Housing-construction-up-but-apf-1585113779.html?x=0